Do Multinational Firms Have Higher Worker Turnover? Evidence from Establishment-level Data in Korea

Purpose - This paper investigates whether multinational firms have higher worker turnover compared to domestic firms. The analysis aims to provide insights into job insecurity in multinational firms. While one strand of the literature emphasizes the multinational firms’ flexibility to relocate production overseas, another argues that geographic diversification makes them less susceptible to economic shocks. Design/Methodology - This paper uses propensity score matching combined with the difference-in-differences approach to estimate the causal effect of multinational status on worker turnover. It uses establishment-level data from Korea and focuses on separation and hire rates in multinational and domestic firms. Findings - A simple comparison indicates that worker turnover in multinational firms is significantly lower; however, the difference-in-differences method in combination with propensity score matching finds no significant effect of multinational status on worker turnover. The results remain robust across various empirical specifications. The findings do not support the concern that multinational firms are associated with high worker turnover. The lower turnover observed in multinational firms results from the fact that firms with initially low turnover are more likely to become multinational. Originality/value - Existing research on worker turnover in multinational firms is limited to European countries. To the best of the author’s knowledge, no previous papers use data from Korea to study the effects of multinational status on worker turnover.